While there is a substantive case for the designation, the decision is a political one that must advance U.S. interests. Since America already has the authorities it needs to sanction North Korea, this designation is a symbolic one that will only reinforce for North Korea that the United States is not interested in diplomacy. This is dangerous.

As North Korea moves to perfect the technology to hit the United States with a nuclear bomb, the debate over policy options is too often painted as a false choice between two unpalatable options: military action to disrupt North Korea’s progress, risking the possibility of a catastrophic war that could engulf Northeast Asia; or accepting North Korea as a nuclear power with the capability to launch a nuclear-tipped ICBM that can reach the continental United States.

When you have unappealing choices like these, an imperfect diplomatic deal starts to look a lot more appealing. Instead of moving forward with the terrorism designation, America must put a real diplomatic proposal on the table now: North Korea implements a moratorium on all nuclear weapons and missile tests and large military exercises, and the U.S. and South Korea scale back large military exercises. This is a version of a Chinese proposal — “freeze for freeze” — that America and South Korea have rejected, but which should be the beginning of a negotiation that the U.S. and South Korea can advance with their own version.

If this effort were to succeed, it would halt North Korea’s progress, freezing it short of the ability to deliver a nuclear bomb to the U.S. mainland for an extended period of time, and create space for diplomacy to work. If this effort fails because North Korea rejects it, the United States will be in a stronger position.

Here’s what it would look like:

First, North Korea would undertake a temporary moratorium on all major military exercises and tests — including all nuclear and ballistic missile tests.

Next, the U.S. and South Korea would temporarily scale back large exercises while making clear that military preparedness efforts — including for cyberattacks, ballistic missile defense and potential asymmetric conventional provocations — would continue as usual.

The terms would be crafted so as to not materially erode U.S.-South Korean military readiness and would not touch the biggest deterrent — U.S. military presence and extended deterrence commitments to Japan and South Korea. The temporary arrangement would be subject to extension by agreement of the parties if further diplomatic progress is made.

The United States, South Korea and Japan would have to support this unified approach to ensure that Pyongyang, Beijing, Moscow and their own publics know that the allies are on the same page.

Last, China would agree to serve as guarantor of North Korea’s behavior. Beijing would agree that if Pyongyang rejected the allies’ terms or violated the agreement, China would crank up economic pressure. As further incentive, Washington would make clear that if the deal doesn’t hold, the U.S. will ramp up its regional military posture, which China opposes.

American reluctance to pursue this proposal has been understandable. Indeed, I have been reluctant to embrace it. Some believe it could send the wrong message for the United States to forgo legal activities (military exercises) in exchange for North Korea forgoing illegal activities (nuclear and missile tests). And some worry about the impact on the U.S.-South Korea alliance, since North Korea continues to seek to drive a wedge between our two countries.

But not testing this proposal means choosing to give up concrete benefits (North Korea can’t achieve its goal of a functional nuclear-tipped ICBM without additional testing) to avoid abstract costs (“legal” vs. “illegal”; vague “harm to the alliance”).

A third objection is more difficult to answer: that altering training exercises would impair the readiness of U.S. and South Korean forces. But America did this in 1993 when it canceled Team Spirit exercises. Furthermore, Washington and Seoul would not give up any military capabilities that cannot be reintroduced if the deal falls apart.

More important, what is the point of military exercises if not to enhance security? If moderating some of the exercises actually produces greater security (pausing development of an ICBM) and continuing the exercises actually produces greater insecurity (by forcing us into bad choices), then isn’t blowing off this approach irrational?

There will be those who say that putting forward this deal after months of rejecting it could smack of desperation — an invitation to further North Korean mischief. But what does that mean in practice? We would not be giving up the credible threat of force. We would not be giving up all of the tools needed for containment and deterrence. And we would be integrating China even more fully into our strategy.

The stakes of a misstep with North Korea are too high. Today, "diplomacy" is viewed as a dirty word, and both sides appear uninterested in coming to the table unless the other side makes concessions first. A new diplomatic offer could be the bold step forward that all sides need to walk back from the brink and open the path to progress.

Michael Fuchs is a senior fellow at the Center for American Progress, and was a deputy assistant secretary of State for East Asian and Pacific Affairs in the Obama administration.